ECC defers summary on increase in electricity tariff

ISLAMABAD: The Economic Coordination Committee (ECC) of the federal cabinet on Monday deferred a summary for a massive hike in electricity tariff.

The meeting chaired by Finance Minister Asad Umar put off the decision on the summary of power rationalisation for the third time, which implies that the government is wary of the tough reaction from consumers.

The meeting also discussed the performance of different sectors of the economy including energy. Apart from the electricity tariff, the issue of subsidy on agricultural tube wells in Balochistan was also on the agenda. The committee decided to consult Chief Minister Balochistan before a decision on the matter.

However, the committee deferred the plan to approve the increase in power tariff. The finance minister said that National Electric Power Regulatory (NEPRA) has proposed an increase of Rs3.98 per unit which cannot be approved.

He said the power tariff cannot be increased until the recovery system is improved, and convened another meeting of the ECC on Wednesday to discuss the recovery of arrears in the power sector.

He directed concerned officials to submit a detailed plan for improvements in the power sector particularly measures to increase recoveries and reduction of losses.

The Auditor General shared a report on audit findings pertaining to financial and operational issues in the four power distribution companies, HESCO, PESCO, QESCO and SEPCO, in the years 2016-18.

The report highlighted significant areas of the distribution system responsible for line and commercial losses. The finance minister directed Ministry of Power to take remedial measures on the issues raised in the report.

It was earlier reported that the ECC was expected to approve a surge in electricity tariff up to RS2.20 per unit which would generate an additional Rs200 billion annually for the government.

It is prime condition of the International Monetary Fund (IMF) to hike electricity tariff, in order to receive new bailout package requested by Asad Umar during his recent visit to Bali to improve the financial situation in the country.

In last ECC meeting held on October 16, the decision of hike in electricity tariff was deferred until the next session of the committee held today. Asad Umar chaired the meeting to mull over the increase in electricity price and decided to deliberate on the difficult decision in the upcoming meeting of the ECC.

The government has argued that the increase is inevitable due to additional increase of Rs35 billion in the circular debt which has surged to over Rs1.2 trillion. The power sector is also facing a liquidity crunch for not increasing the tariff leading the banking sector to stop lending due to the circular debt.